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Why the Integra (ASX:ITG) share price is zooming 15% higher

The Integra (ASX: ITG) share price is zooming 15% higher following the release of the company’s half-year results. Here are the highlights.
The post Why the Integra (ASX:ITG) share price is zooming 15% higher appeared first on The Motley Fool Australia. –

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Integra Group Ltd (ASX: ITG) shares are one of the better performers on the ASX market today after the company released its half-year results for the 2021 financial year. At the time of writing, the Integra share price is surging 15.7% higher to 33 cents.

What were the financial highlights?

The Integra share price is flying today after the company delivered a mostly positive result, despite operating as an independent company for less than 18 months. The company demerged from Cardno Limited (ASX: CDD) in October 2019 to focus on its core business strategies and reduce overhead costs.

In its half-year result for the six months ending 31 December, Integra reported total gross revenue of $210.7 million. This reflected an 8.8% decline compared to the $231 million achieved in H1 FY20. Contributing to the fall, fee revenue also sank to $157 million, a 7.1% drop from the comparative period.

Projects were largely wound down in the Asia Pacific region as COVID-19 impacted market conditions. The company’s Americas segment remained relatively flat due to project delays in its oil and gas business. However, construction materials saw a boom in infrastructure spend.

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) increased over the period to $24.7 million. This represented a gain of 11.3% on a proforma basis. Not taking into account the tax and amortisation, EBIT grew to $9.6 million, up 21.5%. This was based on tighter cost controls and lower overhead expenses which helped offset the reduced fee revenue.

Net cash from operating activities soared to $17.9 million, a jump of 28.5% on the same time last year. The positive cash flow came from management’s focus on improving working capital management.

The company booked a net operating profit after tax of $5.6 million, a 55% advance on H1 FY20’s bottom line.

At the end of the calendar year, Integra had a cash balance of $22.5 million. Net debt excluding any accounting adjustments stood at $42.7 million.

In other news boosting the Integra share price, the board declared an unfranked interim dividend of 1 cent to be paid to eligible shareholders on 21 April 2021.

Outlook

Looking ahead, the company forecasts underlying EBITDA to be between $45 million to $49 million for the full year. Naturally, this is based on no unforeseen circumstances arising to affect current trading conditions, namely COVID-19 and currency exchange movements.

Integra anticipates rewarding shareholders with a final dividend of around 50% to 70% of total net profit after tax.

Furthermore, the board intends to pursue a capital management strategy which could include a share buy-back program. This would effectively reduce the number of shares on its registry, thus making each Integra share more valuable.

Integra share price and company snapshot

Established in 1968, Integra is an Australian-based engineering services company. The group is primarily a quality, testing and measurement business that provides an array of expertise. This includes construction materials testing, subsurface utility engineering services, and quality assurance for energy companies.

In the last 12 months, the Integra share price is down roughly 22% but is up 20% year to date. Integra shares took a turn for the worse during April last year, falling to a low of 16 cents. Since that time, its shares have gone on a rollercoaster ride all the way until the end of June. In recent months, the share price has stabilised around the 30-cent mark.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why the Integra (ASX:ITG) share price is zooming 15% higher appeared first on The Motley Fool Australia.

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